Keeping the robo-taxis running on time

Driverless taxis complicate the ride-hailing business model, but they offer new opportunities that some companies are racing to seize.

In the early stages of autonomous vehicle use, analysts expect the technology to be used mainly in ride-hailing networks. Without drivers who must be paid and given time off, these networks will become easier to deploy around the clock, increasing competition and creating demand for services that can keep vehicles running efficiently to maximize profits.

But without human drivers, some things get harder to handle.

"There are certain expectations when you get into an on-demand car — mostly that it's clean and you can trust it," said Kristin Schondorf, executive director of automotive and transportation mobility at consultancy EY. "Those companies that fall short of meeting our expectations and our needs will lose."

Waymo, Google's self-driving car company, is believed to have been first to test a driverless fleet on U.S. public roads in October. And on Nov. 7, Waymo announced that members of its ride-hailing pilot in Chandler, Ariz., will be able to use vehicles without a safety driver in the next few months.

The company is laying a foundation to ensure its vehicles stay in operation while driving a high number of miles, signing deals with Avis for oil changes and cleaning, and with AutoNation for long-term maintenance and repairs.

As Waymo's competitors begin to finalize plans for self-driving taxi fleets, companies are rushing to meet back-end demands that may arise from these networks, hoping to establish a permanent place in the self-driving economy.

"Companies are working to create a reality for these scenarios and not be at the mercy of the future," Schondorf said.

Analysts predict shared, autonomous vehicles will force a new dynamic on roads worldwide: fewer cars driving more miles.

"A great 'automotive paradox' — where more travel via car than ever, but fewer cars will be needed by individuals — will be a defining quality of the new automotive future," said Daniel Yergin, IHS Markit vice chairman, in a statement. "The shift is just beginning."

In a study released Nov. 14, IHS estimated that global vehicle miles traveled will increase 65 percent from 2017 to 2040, to 11 billion miles, while vehicles sold will decrease to 54 million from about 80 million in the same period. Ride-hailing services alone will buy 10 million vehicles in 2040, up from about 300,000 in 2017, IHS estimated.

More miles driven by fewer vehicles will increase wear and tear per vehicle, and pressure will rise on operators to efficiently deploy fleets as the field becomes more competitive.

"These businesses, in the long run, may have smaller margin profiles," said Sean Behr, CEO of Stratim, a fleet management software startup. "The difference between a successful year and an unsuccessful year will be whether you were able to maximize uptime and minimize cost."

The key to unlocking profit-maximizing efficiency, according to some companies, will be software.

Stratim, which was launched in 2016 but began publicizing its services on Nov. 14, helps companies coordinate fleets, alerting operators when vehicles need to be serviced or moved to meet demand, and setting up appointments with preferred providers for cleaning and maintenance.

General Motors' Maven car-sharing service, Ford Motor Co.'s Chariot on-demand shuttle service and 50 other shared mobility services use the software platform. The startup has received $36.4 million in investments from companies including BMW and venture capital fund Bessemer Venture Partners, according to Crunchbase, a website that tracks startup funding.

By helping fleet operators immediately address vehicle needs, Stratim can help companies make the most of their vehicles, Behr said.

"Every day that a car isn't able to pick up passengers is a day of lost revenue," he said.

Fleet operators need to ensure that their self-driving vehicles are meeting shifting passenger demands and optimizing their time on the road. BestMile, a software platform launched in 2014 in Switzerland, acts like an "air traffic controller" for autonomous vehicle fleets, using data such as rider demand, live traffic information and cars' energy use to make sure the vehicles are where they can best serve customers.

"A manufacturer typically doesn't do much of the fleet management," said Lissa Franklin, vice president of business development and marketing at BestMile. "The advantage to our solution is that it's flexible and agnostic, it can work with multiple vehicles and multiple vehicle types."

The platform works with services from automakers, ride-hailing companies and public transit agencies, and is used by driverless shuttles around the world such as those run by Local Motors.

Even EY is working on a software management platform, called Tesseract, to connect fleet operators, service providers and passengers. The firm is working with automotive partners to develop a system that can manage payments among all parties in a mobility service, from the car's manufacturer to the rider — another aspect of ride-hailing services Schondorf says consumers will expect to be quick, easy and trustworthy.

She said, "The winner of this game is the one that can solve the experience problem and provide it all over the world."